WHO would have thought the British public would be raising their champagne flutes to a fellow called George.
Ok, so in this case the fellow in question is the newborn, future King but its not unthinkable that a few nods were made in chancellor George Osborne’s direction after GDP figures gave the clearest indication yet that Britain is on the path to economic recovery. The bookies were on fine form as they backed the right name for the third in line for the throne while economists were also bang on in their forecasts that the economy would grow by 0.6pc in the second quarter. The figure was double the rate of growth in the first quarter and while it is some way off the growth rates enjoyed in the pre crisis years, my economist sources tell me there is a sense now that a gradual recovery is finally underway. That said, there are still real concerns that the economy remains imbalanced and the recovery in manufacturing and exports has yet to gain real traction.
The second quarter numbers were the last official GDP numbers before the Bank of England publishes updated forecasts in its August Inflation Report. They certainly provide a welcome backdrop for Mark Carney’s first report as Governor. At a first glance, the upbeat data seems to weaken the need for more stimulus from the Bank’s Monetary Policy Committee. However, I’m told that an interest rate hike is still a long way off – possibly late 2015 – while the unwinding of quantitative easing is further off still.
In terms of commodities, it’s fair to say that the gold bulls are stirring again. The gold price has hit $1,300 for the first time in a month on the back of some dovish words from Ben Bernanke and gold obsessives are pointing to an apparent unwinding of short positions in the US commitment of traders reports, which measures the position of professionals in US futures markets. Traders I know are not at all bullish at the moment though.
There are positive signs of growth in the US and even in the UK and QE has to end sooner rather than later. They reckon the precious metal has had its day in the sun for now. Things are looking a bit grim for Copper too. Prices at the LME are still below $7,000 a tonne and news from China is not encouraging.
Last week the central government ordered companies in 19 industries to lower manufacturing capacity, which is a negative flag for industrial metals such as copper if I have ever seen one. It looks like commodity markets are going to remain in the doldrums for some time to come.
That’s all for now, off for a late lunch in the City with a contact I hope is going to give the lowdown on Mr Carney’s first few weeks in charge. In the meantime, let me know your thoughts – as ever, I’m fascinated to know what you think.
Until next time…
To give our clients a different and uniquely informed perspective on the financial markets, Capital Spreads introduces “The City Insider”, a fortnightly view from a City expert, with a senior network of influential bankers, investors, economists and analysts. The identity of the Insider is anonymous – and a closely guarded secret – in order to allow our expert to express forthright, personal views and to protect the identity of the City figures upon whose opinions the Insider draws.
by City Insider
Is Britain on the path to Recovery?
Aug 1, 2013 at 1:01 pm in Market Commentary by City Insider
WHO would have thought the British public would be raising their champagne flutes to a fellow called George.
Ok, so in this case the fellow in question is the newborn, future King but its not unthinkable that a few nods were made in chancellor George Osborne’s direction after GDP figures gave the clearest indication yet that Britain is on the path to economic recovery. The bookies were on fine form as they backed the right name for the third in line for the throne while economists were also bang on in their forecasts that the economy would grow by 0.6pc in the second quarter. The figure was double the rate of growth in the first quarter and while it is some way off the growth rates enjoyed in the pre crisis years, my economist sources tell me there is a sense now that a gradual recovery is finally underway. That said, there are still real concerns that the economy remains imbalanced and the recovery in manufacturing and exports has yet to gain real traction.
The second quarter numbers were the last official GDP numbers before the Bank of England publishes updated forecasts in its August Inflation Report. They certainly provide a welcome backdrop for Mark Carney’s first report as Governor. At a first glance, the upbeat data seems to weaken the need for more stimulus from the Bank’s Monetary Policy Committee. However, I’m told that an interest rate hike is still a long way off – possibly late 2015 – while the unwinding of quantitative easing is further off still.
In terms of commodities, it’s fair to say that the gold bulls are stirring again. The gold price has hit $1,300 for the first time in a month on the back of some dovish words from Ben Bernanke and gold obsessives are pointing to an apparent unwinding of short positions in the US commitment of traders reports, which measures the position of professionals in US futures markets. Traders I know are not at all bullish at the moment though.
There are positive signs of growth in the US and even in the UK and QE has to end sooner rather than later. They reckon the precious metal has had its day in the sun for now. Things are looking a bit grim for Copper too. Prices at the LME are still below $7,000 a tonne and news from China is not encouraging.
Last week the central government ordered companies in 19 industries to lower manufacturing capacity, which is a negative flag for industrial metals such as copper if I have ever seen one. It looks like commodity markets are going to remain in the doldrums for some time to come.
That’s all for now, off for a late lunch in the City with a contact I hope is going to give the lowdown on Mr Carney’s first few weeks in charge. In the meantime, let me know your thoughts – as ever, I’m fascinated to know what you think.
Until next time…
To give our clients a different and uniquely informed perspective on the financial markets, Capital Spreads introduces “The City Insider”, a fortnightly view from a City expert, with a senior network of influential bankers, investors, economists and analysts. The identity of the Insider is anonymous – and a closely guarded secret – in order to allow our expert to express forthright, personal views and to protect the identity of the City figures upon whose opinions the Insider draws.